Markets Today: Brent crude futures surge 14%, STOXX 600 hits two-month lows as FTSE 100 approaches 10000 psychological level

• Markets faced a turbulent Monday due to surging oil prices (Brent crude futures jumped 14%) and escalating Middle East geopolitical tensions
• European shares, including the pan-European STOXX index, hit a two-month low following their worst week in nearly a year, with banking and tech sectors seeing sharp declines.
• Investor attention is fixed on upcoming critical US inflation reports, specifically Wednesday’s CPI and Friday’s core PCE deflator, with a "hot" PCE reading likely to reinforce a cautious Federal Reserve stance and further delay interest rate cuts.

Most Read: Chart alert: WTI crude oil key short-term support at $102.25 for another 20% rally

Markets faced a turbulent Monday as Asian indices plummeted in response to surging oil prices and escalating geopolitical tensions. The inflationary pressure from rising energy costs has sparked fears of a worldwide spike in living expenses and interest rates, prompting a mass exodus of investors toward the liquidity of the US dollar.

This instability is compounded by the political situation in Tehran, where the appointment of Mojtaba Khamenei to succeed his father as Supreme Leader suggests that leadership structures remain intact a week into the conflict with the US and Israel.

The economic fallout is particularly severe for major energy importers. With the Strait of Hormuz remaining impassable for tankers and no resolution to Middle Eastern hostilities in sight, markets are bracing for a prolonged period of high energy costs.

Japan’s Nikkei took a significant hit, falling 7.0% on the heels of a 5.5% drop the previous week, while South Korea’s market saw an even sharper decline of 8.2%.

China, despite maintaining substantial crude oil stockpiles, saw its blue-chip index slide 1.7%.

Interestingly, while China reported a 1.3% rise in consumer prices for February, the uptick in inflation is viewed with a degree of nuance; for a nation that has historically struggled with disinflationary pressure, this shift isn't entirely unwelcome, even if the current oil spike threatens to accelerate that trend further.

European equity markets faced a sharp downturn on Monday, with the pan-European STOXX index sliding 2.34% to reach its lowest level in over two months.

This decline follows a bruising previous week, the worst in nearly a year as market participants react to an expanding Middle East conflict that has sent oil prices surging more than 25% toward $120 a barrel.

The sell-off was felt acutely across multiple sectors, with banking stocks extending their recent losses by another 3.2% and the tech sector dropping 3.1%. The aviation industry also struggled under the weight of rising fuel costs, causing major carriers like Lufthansa and Air France-KLM to see significant share price declines.

Conversely, the energy sector managed a slight gain of 0.1% due to the crude spike, and defense firms like Leonardo saw an uptick of 1.4% as regional tensions intensified.

Adding to the pessimistic sentiment, fresh economic data revealed that German industrial orders for January fell well beyond expectations, underscoring broader concerns about European growth.

With the markets in a defensive crouch, investor attention is now focused on upcoming commentary from ECB President Christine Lagarde and other euro zone finance ministers at the Eurogroup meeting, where officials are expected to address the dual challenges of inflation and geopolitical instability.

On Monday, the US dollar surged as investors sought safety amid escalating global instability, pushing major currencies significantly lower.

The euro and sterling both saw substantial declines of 0.7% and 0.8% respectively, with the euro hitting a three-and-a-half-month low of $1.1534.

Traditional safe havens were not immune to the dollar's strength; the Swiss franc fell 0.6% to trade at 0.7804 per dollar, while the Australian dollar also slipped roughly 0.6%.

The dollar’s momentum slowed slightly during the Asian afternoon following a report from the Financial Times indicating that G7 finance ministers are preparing to discuss a coordinated release of oil from emergency reserves.

This potential intervention, managed by the International Energy Agency (IEA), aims to stabilize energy markets after crude prices spiked over 25% due to the widening conflict in the Middle East.

Currency Power Balance

Global energy markets experienced a historic "whiplash" session as oil prices surged toward $120 a barrel, reaching levels not seen since mid-2022.

Driven by supply cuts from major producers and escalating fears of shipping disruptions amid the expanding conflict involving the US, Israel, and Iran, Brent crude futures jumped 14% to $105.71, while US West Texas Intermediate (WTI) rose 13% to $103.06. At its peak during the day, Brent touched $119.50, marking the largest absolute single-day price jump in history.

This massive spike follows an already aggressive rally last week, where Brent and WTI climbed 28% and 36%, respectively.

In the precious metals market, gold prices retreated as the surge in the US dollar made the greenback-priced bullion more expensive for international buyers.

Spot gold fell 1.4% to $5,097.70 per ounce, recovering slightly after an initial 2% drop earlier in the session, while US gold futures for April delivery settled 1% lower at $5,106.

Beyond the currency pressure, the "haven" appeal of gold was countered by fears that skyrocketing energy costs will cement high inflation, effectively dimming any hopes for near-term interest rate cuts by central banks.

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As the trading day continues, markets remain cautious. The lack of high impact European data releases means markets will remain occupied by developments in the Middle East.

Heading into the US session, the soft US jobs data from January would usually spark concerns, it is expected to take a backseat to this week’s critical inflation reports.

Market attention is firmly fixed on Wednesday’s Consumer Price Index (CPI) release and Friday’s core Personal Consumption Expenditures (PCE) deflator. Analysts warn that the PCE figure could come in "hot" at 3.1% year-on-year, largely due to companies implementing annual price hikes at the start of the year.

Such a result would likely reinforce the Federal Reserve’s cautious stance, further delaying any anticipated interest rate cuts.

In the currency markets, the US Dollar Index (DXY) has already been testing recent highs near 99.65/70 during Asian trading hours. Given the current lack of geopolitical de-escalation, the greenback appears poised for further gains.

The index is likely to challenge a higher resistance range between 100.25 and 100.35 as the week progresses, driven by a combination of safe-haven demand and the prospect of a more hawkish Fed.

From a technical perspective, the FTSE 100 index continued its decline with a gap down after the weekend.

Having printed fresh lows this morning at 10073, the index is looking to recover some the gap over the weekend.

For now though, this will depend on overall risk sentiment.

The period-14 RSI on a four-hour chart is leaving oversold territory and is crossing back above the 30 handle. This would hint at a shift in momentum from bearish to bullish.

Immediate support rests at 10073 before the 10000 handle comes into focus.

Resistance to the upside at 10207 needs to be cleared if bulls are to make a run for the 10260 (closing the gap) handle and beyond.

FTSE 100 Index Four-Hour Chart, March 9, 2026

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